Naira Records First Annual Gain in 13 Years as CBN FX Reforms Drive 6.5% Appreciation in 2025

Nigeria’s naira closed 2025 on a rare positive note, posting its first annual appreciation in more than a decade as foreign exchange reforms by the Central Bank of Nigeria (CBN) began to restore confidence in the local currency. The naira strengthened by 6.5 per cent against the US dollar, marking a significant turnaround after years of steady decline.

Data from the apex bank show that the currency ended the year at ₦1,435 to the dollar on December 31, compared with ₦1,535 at the close of 2024. The last time the naira recorded a full-year gain was in 2012, when it edged up slightly. Since then, persistent depreciation had become the norm, making the 2025 rebound a major psychological and policy milestone.

The gain capped a volatile year for the currency. In the first half of 2025, the naira came under intense pressure, sliding to a low of about ₦1,602/$ in April as inflation surged, demand for dollars remained strong and FX inflows were delayed. However, sentiment began to shift from May, with the naira steadily recovering through the middle of the year and breaking below the ₦1,500/$ level in September.

Analysts say the turnaround was driven by tighter monetary policy, improved FX inflows and a sharp drop in speculative trading following reforms introduced by the CBN in 2024. These measures unified exchange-rate windows, improved transparency and strengthened price discovery, narrowing the gap between official and parallel market rates to below five per cent. According to Kwik Securities analyst Ade Omotosho, the improved pricing mechanism helped support the naira in the second half of the year.

Despite the positive headline figures, economists warn that challenges remain. Inflation is still elevated, while Nigeria’s heavy reliance on oil exports leaves the currency vulnerable to swings in global crude prices and external shocks. Nonetheless, the naira’s 2025 performance breaks a 13-year cycle of depreciation and signals that the central bank’s reform agenda is beginning to gain traction, offering cautious optimism for the year ahead.

source: The Sun